So I have written about fragmented industries being good opportunities for aspiring entrepreneurs to build sizeable businesses in. However, some may be wondering, how exactly does one find or discover fragmented industries? Well with the Internet today, this is a lot easier than it probably used to be, but the way I search for them is to do the following:
1) Check industry reporting services such as IBIS and Hoovers, which are usually good sources of industry reports on the basics of an industry (usually they will tell if an industry is fragmented or not).
2) Randomly Google (or search) to see if discussions about an industry are brought up. For example, if you say are research the plastic bottle manufacturing industry, you could Google "plastic bottle manufacturing fragmented" or "plastic bottle manufacturing concentrated" and see what comes up.
3) Find public companies in said industry and read their annual report. Usually, the annual report has two sections at front, titled "Business" which gives a description of the type of business the company is in, and "Risk Factors" or "Risk" which gives a description of the risks the company faces. Usually somewhere in these is located a description about whether the industry is fragmented or not, what/who the competitor companies are, and so forth.
Friday, February 25, 2011
Thursday, February 24, 2011
Public Sector Versus Private Sector Unions
As you may have noticed, there is a standoff that has begun in Wisconsin that is now spilling over into other states, essentially regarding the public-employee (aka government) unions. It started when newly-elected Wisconsin governor Scott Walker began moving to enact legislation that would require the Wisconsin public-sector workers, minus the police and firefighters, to begin contributing more to their pension funds and healthcare. They contribute significantly less than their private-sector counterparts currently. In addition, union dues would be made voluntary, and collective-bargaining would be limited to just wages and not the other portion of incomes, benefits.
As a result, the unions revolted. Protesters have flooded the state capital, and the whole issue went national. Now the effect is spilling over into other neighboring states. Initially, the unions bulked at Walker's entire proposal, but then they realized that it would not be good PR to be protesting having to pay more of their pay into pensions and healthcare when they pay less than most private-sector workers, and even with the plan's increases, they will still pay less. So on this, the union catipulated and said they agree with Walker on the pension and healthcare contributions, that their real issue for protesting is what they see as his attempt to end the union's collective-bargaining rights.
What is really at stake here is what is a major source of funding for the Democratic party, perhaps the major source. Most unions in the United States today are government unions, as private-sector unionization has declined enormously over the past few decades. If Walker's legislation passes, this will have likely at least two effects:
1) A major spillover effect into other states, possibly even national
2) The states that it is occurring in are very important swing states and Progressive-leaning states. If the unions lose their ability to be able to act as a major source of funding for the Democrats, it means the Democratic party within these very important states will be at a severe financial disadvantage come election time. This is very problematic as the unions are major sources of organizing the Leftwing voter base.
So what is at stake is to a degree the very future of the Democratic party. It also shows what seems to be a major problem with the Democratic party as well, which is that, in addition to being a party philosophically for large government, the Democratic party seems to have literally become the party of government, as their base consists of government workers. The reason Scott Walker and other governors are tackling this issue is because the public-sector unions in many of the states have developed a very cozy relationship with the state and local governments that has resulted in what are unsustainable pension and healthcare obligations. A prime example of this, albeit private-sector, was General Motors Corporation. Back in the 1960s, when GMC was pretty much the most prosperous company in the world, the executives made very lavish pension and healthcare obligations to the United Auto Workers union. They did not take into account the fact that forty to fifty years down the road, when these pensions and healthcare obligations would be being paid out, that the company might not be so prosperous anymore. This is exactly what happened, and GM's pension and healthcare obligations were completely unsustainable. The same problem tends to apply to government unions as well. Politicians can create lavish pension, benefits, and healthcare packages for government unions because such perks are to be paid out down the road, and the politician usually doesn't care. Their primary concern is getting re-elected. Legislation such as Scott Walker's thus is intended to end the collective-bargaining power of unions for things such as pensions, healthcare, and so forth, and only to preserve it for wages. Wages are short-term. If a politician promises the union higher wages, the impact to the budget is immediate. Whereas if a politician promises lavish pension and healthcare plans, the impact to the budget may not be felt for decades. To make the current pension and healthcare plans more sustainable, the plan requires government employees to cotnribute more of their pay to their pension and healthcare plans, although the end result would be that they still pay less than private-sector workers. And workers would no longer be mandated to pay the union dues.
As a sidenote, I think something that is not being discussed enough is that there is a difference between private-sector and public-sector unions. Private sector unions can be a good force in protecting workers from corporations that force the workers to work in very unsafe conditions or try to overwork the workers or try to renege on promises the company made on their own (such as screwing a worker out of a promised pension after twenty years of work because the company can get away with it). Such unions were especially helpful back in the days prior to labor laws and regulations to ensure a safe workplace. In modern times however, with all of the laws and regulations we have in place today, much of that kind of need for unions is gone. It still applies in certain industries, such as the oil industry I am sure and also mining (there was that company that got caught not adhering to safety regulations for the miners), and probably some other industries.
Where private-sector unions went wrong I think is in how they seek to increase the wages and benefits their workers can get. This is wrong, as the purpose of the business is to make money for the shareholders (the owners of the company). The workers are to be paid what the market decides. Economically, unions are cartels. You have a free-market. In the free-market, businesses compete with each other to offer products and services, the prices of which are decided by market forces, and workers compete with each other to offer their labor and skills to various businesses. Businesses will also compete with one another for workers. This is what controls incomes, which consist of wages and the various benefits. Incomes are the prices of workers to a business. With a union, you have a legalized worker cartel. The workers can artifically drive up the cost of the skills/labor/services they offer. With these cartels, unions often act as if businesses are cows to be milked for everything they can get, and if the business refuses, the workers can try bullying tactics such as a strike. What unions can do to an industry is to drive up the unemployment rate in that industry (and in the overall economy if there are enough unionized companies).
Now if businesses get caught trying to form a cartel, that is blatantly illegal, but it is allowed for workers. Some people, when they hear business, might think "Big Business," but not all businesses are big. What if all the local gas stations decided to try and form a cartel? Are the gas station owners rich? Probably not. Would there be an uproar from the public? Probably! Or if the local auto mechanics all decided to form a cartel? Again, illegal, but it is okay for workers to form cartels (unions).
One thing that also gets me is that the Left like to act as if being pro-union is the same as being pro-worker. It isn't, no moreso than being pro-business is equivalent to being pro-market. Unions hate right-to-work laws because they make it where the person is not mandated to join the union if they work at the company. This is very pro-worker. Originally, it was a national law that was passed that mandated people had to become a member of the union if where they worked was unionized. Then this was undone somewhat when they changed the law to allow states to pass right-to-work laws. The secret ballot vote, removal of which would make it easier to unionize places because how a worker votes is public, is also pro-worker. Mandating workers get to have a say in how the union spends their dues for political issues, is pro-worker. Unions are against all of these.
Historically, unions have supported the minimum wage because it prices cheaper labor out of the market. They have also throughout much of the 20th century been tied in with organized crime and unions have a history of supporting socialism as well.
On government unions, public-sector unions can have a perverse set of incentives compared with private-sector unions. Old-style Democrats such as Franklin Delano Roosevelt and the NYC mayor Fiorello LaGuardia were against public-sector unions for this reason. Public unions can be a danger in one respect because if they go on strike, they can literally shut down the city/state/country. That is why when JFK signed the legislation allowing public-sector workers to unionize, he exempted major government agencies like the FBI, CIA, NSA, etc...the military also is not unionized (although part of this also may be because organized labor in the 1970s looked into trying to unionize the military and concluded that the way the military is structured, it just wouldn't be workable anyhow).
The other problem is financial: A private-sector union always knows that they have to be careful because if they demand too much, they can kill the company, and if the company dies, so does the union. The management also know this (an exception could be GMC, where back in the 60s, when the management made some very lavish promises to the unions, GM was an incredibly dominant company, so management was a bit careless, and now that GM got into trouble, the government came to its aid). A public-sector union, on the other hand, knows that they can milk the government for as much as possible because the government is not a business; it taxes, and in the end, it can always raise taxes if it runs short of money (which the politicians recognize); the problem, as they are finding out now, is that this has a limit too.
A public-sector union will seek to increase the size of the government because this means more government workers, which means more union members, which means more union dues, more money, more clout and influence, etc...and it perverts the politicians, who end up solely in their pocket. It also means money that should go to things like infrastructure maintenance can end up going to the unions. In seeking to increase government spending via increased wages, benefits, and so forth, along with increasing the size of government to gain more workers, they are also robbing the public treasury in the process. With a private-sector union, the workers one could argue are taking wealth that belongs to the shareholders, but it's still wealth those workers helped to create. With a public-sector union, they are taking wealth that was paid into the treasury via taxes from the private-sector workers who create the wealth.
Public-sector unions also can utilize intimidation tactics of various kinds as well to get their way, such as having massive numbers of workers call in sick, or having large numbers of workers just suddenly walk off the job. There are other tactics as well, in California the unions there really have it refined to an artform from my understanding. I really wonder if public-sector unions should be outlawed completely. In Europe, we see the effects of government unions on the national level. A country can literally be on the financial cliff, but threaten to make the workers start working 40 hours a week instead of 35 hours, or make it where they have to retire at 65 instead of 60, and you can have rioting in the streets.
Maybe public-sector unions are helpful to government workers against abuses in some ways that I am unaware of, but if so, then I think they need to function just to protect the workers from unsafe working conditions, government unnecessarilly reneging on contracts, and so forth. They should not be allowed to artifically drive up wages and benefits. The government has to compete with the private sector for workers, just like the military does. If you want police, firefighters, teachers, and so forth, offer decent pay and benefits and they will come. A union shouldn't be needed for this. If the pay and benefits are too low, there would be a shortage of public-sector workers because no one would go into government work. Or if this argument is too simple due to other variables, limit the powers of public unions to some degree so that they don't end up bankrupting a state and buying so many politicians.
As a result, the unions revolted. Protesters have flooded the state capital, and the whole issue went national. Now the effect is spilling over into other neighboring states. Initially, the unions bulked at Walker's entire proposal, but then they realized that it would not be good PR to be protesting having to pay more of their pay into pensions and healthcare when they pay less than most private-sector workers, and even with the plan's increases, they will still pay less. So on this, the union catipulated and said they agree with Walker on the pension and healthcare contributions, that their real issue for protesting is what they see as his attempt to end the union's collective-bargaining rights.
What is really at stake here is what is a major source of funding for the Democratic party, perhaps the major source. Most unions in the United States today are government unions, as private-sector unionization has declined enormously over the past few decades. If Walker's legislation passes, this will have likely at least two effects:
1) A major spillover effect into other states, possibly even national
2) The states that it is occurring in are very important swing states and Progressive-leaning states. If the unions lose their ability to be able to act as a major source of funding for the Democrats, it means the Democratic party within these very important states will be at a severe financial disadvantage come election time. This is very problematic as the unions are major sources of organizing the Leftwing voter base.
So what is at stake is to a degree the very future of the Democratic party. It also shows what seems to be a major problem with the Democratic party as well, which is that, in addition to being a party philosophically for large government, the Democratic party seems to have literally become the party of government, as their base consists of government workers. The reason Scott Walker and other governors are tackling this issue is because the public-sector unions in many of the states have developed a very cozy relationship with the state and local governments that has resulted in what are unsustainable pension and healthcare obligations. A prime example of this, albeit private-sector, was General Motors Corporation. Back in the 1960s, when GMC was pretty much the most prosperous company in the world, the executives made very lavish pension and healthcare obligations to the United Auto Workers union. They did not take into account the fact that forty to fifty years down the road, when these pensions and healthcare obligations would be being paid out, that the company might not be so prosperous anymore. This is exactly what happened, and GM's pension and healthcare obligations were completely unsustainable. The same problem tends to apply to government unions as well. Politicians can create lavish pension, benefits, and healthcare packages for government unions because such perks are to be paid out down the road, and the politician usually doesn't care. Their primary concern is getting re-elected. Legislation such as Scott Walker's thus is intended to end the collective-bargaining power of unions for things such as pensions, healthcare, and so forth, and only to preserve it for wages. Wages are short-term. If a politician promises the union higher wages, the impact to the budget is immediate. Whereas if a politician promises lavish pension and healthcare plans, the impact to the budget may not be felt for decades. To make the current pension and healthcare plans more sustainable, the plan requires government employees to cotnribute more of their pay to their pension and healthcare plans, although the end result would be that they still pay less than private-sector workers. And workers would no longer be mandated to pay the union dues.
As a sidenote, I think something that is not being discussed enough is that there is a difference between private-sector and public-sector unions. Private sector unions can be a good force in protecting workers from corporations that force the workers to work in very unsafe conditions or try to overwork the workers or try to renege on promises the company made on their own (such as screwing a worker out of a promised pension after twenty years of work because the company can get away with it). Such unions were especially helpful back in the days prior to labor laws and regulations to ensure a safe workplace. In modern times however, with all of the laws and regulations we have in place today, much of that kind of need for unions is gone. It still applies in certain industries, such as the oil industry I am sure and also mining (there was that company that got caught not adhering to safety regulations for the miners), and probably some other industries.
Where private-sector unions went wrong I think is in how they seek to increase the wages and benefits their workers can get. This is wrong, as the purpose of the business is to make money for the shareholders (the owners of the company). The workers are to be paid what the market decides. Economically, unions are cartels. You have a free-market. In the free-market, businesses compete with each other to offer products and services, the prices of which are decided by market forces, and workers compete with each other to offer their labor and skills to various businesses. Businesses will also compete with one another for workers. This is what controls incomes, which consist of wages and the various benefits. Incomes are the prices of workers to a business. With a union, you have a legalized worker cartel. The workers can artifically drive up the cost of the skills/labor/services they offer. With these cartels, unions often act as if businesses are cows to be milked for everything they can get, and if the business refuses, the workers can try bullying tactics such as a strike. What unions can do to an industry is to drive up the unemployment rate in that industry (and in the overall economy if there are enough unionized companies).
Now if businesses get caught trying to form a cartel, that is blatantly illegal, but it is allowed for workers. Some people, when they hear business, might think "Big Business," but not all businesses are big. What if all the local gas stations decided to try and form a cartel? Are the gas station owners rich? Probably not. Would there be an uproar from the public? Probably! Or if the local auto mechanics all decided to form a cartel? Again, illegal, but it is okay for workers to form cartels (unions).
One thing that also gets me is that the Left like to act as if being pro-union is the same as being pro-worker. It isn't, no moreso than being pro-business is equivalent to being pro-market. Unions hate right-to-work laws because they make it where the person is not mandated to join the union if they work at the company. This is very pro-worker. Originally, it was a national law that was passed that mandated people had to become a member of the union if where they worked was unionized. Then this was undone somewhat when they changed the law to allow states to pass right-to-work laws. The secret ballot vote, removal of which would make it easier to unionize places because how a worker votes is public, is also pro-worker. Mandating workers get to have a say in how the union spends their dues for political issues, is pro-worker. Unions are against all of these.
Historically, unions have supported the minimum wage because it prices cheaper labor out of the market. They have also throughout much of the 20th century been tied in with organized crime and unions have a history of supporting socialism as well.
On government unions, public-sector unions can have a perverse set of incentives compared with private-sector unions. Old-style Democrats such as Franklin Delano Roosevelt and the NYC mayor Fiorello LaGuardia were against public-sector unions for this reason. Public unions can be a danger in one respect because if they go on strike, they can literally shut down the city/state/country. That is why when JFK signed the legislation allowing public-sector workers to unionize, he exempted major government agencies like the FBI, CIA, NSA, etc...the military also is not unionized (although part of this also may be because organized labor in the 1970s looked into trying to unionize the military and concluded that the way the military is structured, it just wouldn't be workable anyhow).
The other problem is financial: A private-sector union always knows that they have to be careful because if they demand too much, they can kill the company, and if the company dies, so does the union. The management also know this (an exception could be GMC, where back in the 60s, when the management made some very lavish promises to the unions, GM was an incredibly dominant company, so management was a bit careless, and now that GM got into trouble, the government came to its aid). A public-sector union, on the other hand, knows that they can milk the government for as much as possible because the government is not a business; it taxes, and in the end, it can always raise taxes if it runs short of money (which the politicians recognize); the problem, as they are finding out now, is that this has a limit too.
A public-sector union will seek to increase the size of the government because this means more government workers, which means more union members, which means more union dues, more money, more clout and influence, etc...and it perverts the politicians, who end up solely in their pocket. It also means money that should go to things like infrastructure maintenance can end up going to the unions. In seeking to increase government spending via increased wages, benefits, and so forth, along with increasing the size of government to gain more workers, they are also robbing the public treasury in the process. With a private-sector union, the workers one could argue are taking wealth that belongs to the shareholders, but it's still wealth those workers helped to create. With a public-sector union, they are taking wealth that was paid into the treasury via taxes from the private-sector workers who create the wealth.
Public-sector unions also can utilize intimidation tactics of various kinds as well to get their way, such as having massive numbers of workers call in sick, or having large numbers of workers just suddenly walk off the job. There are other tactics as well, in California the unions there really have it refined to an artform from my understanding. I really wonder if public-sector unions should be outlawed completely. In Europe, we see the effects of government unions on the national level. A country can literally be on the financial cliff, but threaten to make the workers start working 40 hours a week instead of 35 hours, or make it where they have to retire at 65 instead of 60, and you can have rioting in the streets.
Maybe public-sector unions are helpful to government workers against abuses in some ways that I am unaware of, but if so, then I think they need to function just to protect the workers from unsafe working conditions, government unnecessarilly reneging on contracts, and so forth. They should not be allowed to artifically drive up wages and benefits. The government has to compete with the private sector for workers, just like the military does. If you want police, firefighters, teachers, and so forth, offer decent pay and benefits and they will come. A union shouldn't be needed for this. If the pay and benefits are too low, there would be a shortage of public-sector workers because no one would go into government work. Or if this argument is too simple due to other variables, limit the powers of public unions to some degree so that they don't end up bankrupting a state and buying so many politicians.
Tuesday, February 15, 2011
Some Random, Unfocused Thoughts On the Subject of Government
So the subject of "limited government" is something that I have been thinking about a good deal as of late. Basically I wonder what "limited government" really means. Now I consider myself, on paper, a limited government guy. "Free-market capitalism, fiscal conservatism, low taxes, limited government." to different people, this term can have different meanings however. For some people, the term "limited government" means no Social Security, Medicare, or Medicaid (or no equivalents) and very lax regulations over industry and commerce. To others, it just means a limited social welfare state, but not an outright European social welfare state (where benefits from the government are much more generous than what we tend to have in America). To some it means a large defense budget, but a limited social welfare state, to others it means a very miniscule defense budget.
Now as I said, I consider myself to be a limited government guy, but in practice, I wonder if I am really as limited a government guy as I like to think. I have no problem with programs like Social Security, Medicare, and Medicaid, or at least, with what they do. I am not sure if I agree with HOW they function, as they are all government-run and seem to be on an unsustainable path. However, on the other hand, I am not entirely sure if the alternative proposals, such as forms of individual accounts people would pay into, would work either.
Now the standard conservative/very libertarian argument goes that we should leave things like retirement and healthcare to the market and the private individual. If you retire and you haven't save enough to survive, then that's your fault. Well okay, I understand that argument, but how is it to be done in a secure manner? A lot of people did just this, thinking they had saved enough for retirement, only to then see their holdings in the stock market completely plummet with the recent financial crisis.These are people who saved money and were prudent, and still got screwed in the end.
If one wanted to store all of their money in a bank, well bank accounts are only insured up to $150,000 I believe (or was it $250,000?). So if you put $1 million into an account in some bank and then the bank folds due to a financial or economic crisis of some kind, the Federal Deposit Insurance Corporation will only reimburse you with $150,000 of your money. So you can still end up up the creek without a paddle, so-to-speak (and this is WITH the government insuring the banking sector in this sense; in the old days, before the Federal Reserve and the FDIC, if a bank folded, THAT WAS IT, you were really out of luck).
So while we can argue that the government is a bad manager of money (Social Security is a giant Ponzi scheme technically, what gets paid in by workers today gets paid out to recipients), we can also argue that to just say "Individuals have a responsibility to save for their own retirement and if they don't, that's their fault," is a little oversimplifying it I think.
This is where programs like Social Security and Medicare come in. Social Security is something everyone pays into when they pay taxes. The "idea" of it was what you pay into it is what you get paid out of it, but the way it really works is that what gets paid in currently is what gets paid out to current recipients. There used to be quite a number of people paying into SS for every recipient, but eventually, the system is going to get where there are more recipients than payers. In addition to this, the government also opened up the SS trust fund to spend on other things (one of the most snake-oil things ever done by our government I think). But the idea is that it would provide a secure form of retirement for people, or at least in theory again. Technically, when SS began, most people did not live to be sixty-five years old (which was the age at the time one could begin to collect SS). so most people were expected to die before they would receive it. To make SS like this today, the retirement age needs to be raised to something like seventy-five years old, basically make people work until they die. I don't know how realistic this would be for most people though (would medical ailments stop a lot of people from working, or what if a person is unable to find employment?), or how realistic it would be to even pass it politically as most of the general public assume that SS is meant to be there to allow people to retire and receive a base amount from the government, not to be a program for only the miniscule number of people who live beyond the average age of death.
There are thus multiple ways proposed to make SS solvent again for many more years, ranging from a combination of raising the retirement age, to raising the FICA tax (the SS tax), to raising the cap on income subject to the FICA tax, to getting the government's paws out of the SS trust fund (don't know if this is even doable), and so forth. As mentioned, I do not know if raising the retirement age is doable politically or even practical if it was doable politically. Raising the FICA tax rate can be done, but people won't like it. Raising the cap on income subject to the FICA tax could also be done, the problem with this is that since SS is paid according to how much one paid in, then if the full income of say someone making $2 million a year is to be subject to the FICA tax, then come retirement, a massive amount of money must be paid out to said likely wealthy (or very well-off person). One can of course imagine the political ramifications for this. You'd basically have rich folk getting massive SS payments, which wouldn't sit well with much of the public. Now considering how SS is supposed to function (you get paid out what you paid in), this should be fine, but that still wouldn't stop a lot of people from being offended by it. Populist politics never go out of fashion. The government avoids this whole issue simply by making it where only the first (I think right now $210,000, but I maybe off by a bit) of a person's income is subject to FICA taxes.
Now, what could be done is if subjecting all of a person's income, no matter how much they make, to the FICA tax, we make it where say those making over $250,000 a year would see a cap in how much SS they can receive during retirement, because it would be assumed that they would be wealthy enough in retirement to be okay. The big problem here though is that then you are turning SS into a defacto welfare program. No more would the claim be made that SS is a mandatory retirement program that you pay into to then be paid out of in the future. It would be pointed out that SS is in fact a welfare program for retirement, one in which although everyone is taxed for it, a large chunk of its money would come from higher earners.
As for getting government's hands out of the SS trust fund, such a large portion of the government's budget comes from SS taxes that this is nigh impossible. The government would need to come up with a completely new source of revenue.
What will probably happen is that SS will gradually be phased-out over the years and then eventually be replaced with something totally new. SS cannot be privatized. It can be combined perhaps with some private elements, but privatizing it would not be workable, because then it would be subject to the market, which means peoples accounts could be wiped out in the event of an economic, financial market, or stock market crash. So no matter how privatized, SS would need to retain some form of governmental security.
Medicare is another government program that is very popular. It is essentially a single-payer healthcare program for the elderly. It helps remove a massive burden on the part of the elderly, i.e., how to pay for healthcare. At least to a degree anyway. Medicare is funded by the federal government, via the FICA tax, but it is managed by the states. Medicare has a lot of problems of its own, ranging from high levels of fraud and abuse, to having been expanded beyond its original purpose, to not being financially sustainable in the long-term. Like SS, it may well end up being gradually phased-out over time and repalced with something else altogether.
In addition to Medcare, there is also Medicaid, which is a single-payer health insurance program for poor folk (many of its recipients, from what I have heard, are also among the elderly as well). And then of course there are programs such as unemployment benefits, food stamps, and other government programs. Now as I said, I have no problem with any of these programs in terms of WHAT THEY DO, because I see them as programs meant to serve as social safety nets. They are programs for the elderly (at least for the elderly who can no longer work), the disabled, and those who end up temporarily knocked on the butt due to plain bad luck. They are not an outright welfare state meant to pay people literally not to work. They don't seek to have the government coddle people for their entire lives. In terms of how they are actually structured, their functioning mechanics, I think the big ones (Medicare, Medicaid, Social Security) are badly designed.
The thing is, and I really am trying to find a point to this post as I can't, is that I don't know if adherence to all of these makes me a limited-government guy or not. Take unemployment benefits. One of the arguments made by strict fiscal conservatives and libertarians is that in hard times, charities, churches, and family are who should care for people and provide help, that the government should not be involved in this.
Well okay, I can understand this argument, but a problem is what happens if you have a major economic crisis as we just did, where charitable donations decline to charities and churches right when people need these institutions the most and where some charities lost their entire fortune due to folks like Bernie Madoff, and thus can no longer help anyone? At this point, if charities and churches are seeing a shortage of funds while seeing a massive increase in the number of needy people and families who need help, the government is the only entity with the ability to step in and provide help irregardless of the economy's health.
With regards to things such as government regulation over industry, I very much am a believer in, overall, light and efficient regulation for the economy. Obviously some industries must be more regulated than others, for example the automobile industry is a lot more regulated than the software industry. But overall, the economy should be subject to light, but efficient, regulation. Basically regulation that will do its job of keeping us safe, but not be excessive to the point that it allows big corporations to dominate and stifles innovation, entrepreneurship, economic growth, and so forth.
Now as I said, I consider myself to be a limited government guy, but in practice, I wonder if I am really as limited a government guy as I like to think. I have no problem with programs like Social Security, Medicare, and Medicaid, or at least, with what they do. I am not sure if I agree with HOW they function, as they are all government-run and seem to be on an unsustainable path. However, on the other hand, I am not entirely sure if the alternative proposals, such as forms of individual accounts people would pay into, would work either.
Now the standard conservative/very libertarian argument goes that we should leave things like retirement and healthcare to the market and the private individual. If you retire and you haven't save enough to survive, then that's your fault. Well okay, I understand that argument, but how is it to be done in a secure manner? A lot of people did just this, thinking they had saved enough for retirement, only to then see their holdings in the stock market completely plummet with the recent financial crisis.These are people who saved money and were prudent, and still got screwed in the end.
If one wanted to store all of their money in a bank, well bank accounts are only insured up to $150,000 I believe (or was it $250,000?). So if you put $1 million into an account in some bank and then the bank folds due to a financial or economic crisis of some kind, the Federal Deposit Insurance Corporation will only reimburse you with $150,000 of your money. So you can still end up up the creek without a paddle, so-to-speak (and this is WITH the government insuring the banking sector in this sense; in the old days, before the Federal Reserve and the FDIC, if a bank folded, THAT WAS IT, you were really out of luck).
So while we can argue that the government is a bad manager of money (Social Security is a giant Ponzi scheme technically, what gets paid in by workers today gets paid out to recipients), we can also argue that to just say "Individuals have a responsibility to save for their own retirement and if they don't, that's their fault," is a little oversimplifying it I think.
This is where programs like Social Security and Medicare come in. Social Security is something everyone pays into when they pay taxes. The "idea" of it was what you pay into it is what you get paid out of it, but the way it really works is that what gets paid in currently is what gets paid out to current recipients. There used to be quite a number of people paying into SS for every recipient, but eventually, the system is going to get where there are more recipients than payers. In addition to this, the government also opened up the SS trust fund to spend on other things (one of the most snake-oil things ever done by our government I think). But the idea is that it would provide a secure form of retirement for people, or at least in theory again. Technically, when SS began, most people did not live to be sixty-five years old (which was the age at the time one could begin to collect SS). so most people were expected to die before they would receive it. To make SS like this today, the retirement age needs to be raised to something like seventy-five years old, basically make people work until they die. I don't know how realistic this would be for most people though (would medical ailments stop a lot of people from working, or what if a person is unable to find employment?), or how realistic it would be to even pass it politically as most of the general public assume that SS is meant to be there to allow people to retire and receive a base amount from the government, not to be a program for only the miniscule number of people who live beyond the average age of death.
There are thus multiple ways proposed to make SS solvent again for many more years, ranging from a combination of raising the retirement age, to raising the FICA tax (the SS tax), to raising the cap on income subject to the FICA tax, to getting the government's paws out of the SS trust fund (don't know if this is even doable), and so forth. As mentioned, I do not know if raising the retirement age is doable politically or even practical if it was doable politically. Raising the FICA tax rate can be done, but people won't like it. Raising the cap on income subject to the FICA tax could also be done, the problem with this is that since SS is paid according to how much one paid in, then if the full income of say someone making $2 million a year is to be subject to the FICA tax, then come retirement, a massive amount of money must be paid out to said likely wealthy (or very well-off person). One can of course imagine the political ramifications for this. You'd basically have rich folk getting massive SS payments, which wouldn't sit well with much of the public. Now considering how SS is supposed to function (you get paid out what you paid in), this should be fine, but that still wouldn't stop a lot of people from being offended by it. Populist politics never go out of fashion. The government avoids this whole issue simply by making it where only the first (I think right now $210,000, but I maybe off by a bit) of a person's income is subject to FICA taxes.
Now, what could be done is if subjecting all of a person's income, no matter how much they make, to the FICA tax, we make it where say those making over $250,000 a year would see a cap in how much SS they can receive during retirement, because it would be assumed that they would be wealthy enough in retirement to be okay. The big problem here though is that then you are turning SS into a defacto welfare program. No more would the claim be made that SS is a mandatory retirement program that you pay into to then be paid out of in the future. It would be pointed out that SS is in fact a welfare program for retirement, one in which although everyone is taxed for it, a large chunk of its money would come from higher earners.
As for getting government's hands out of the SS trust fund, such a large portion of the government's budget comes from SS taxes that this is nigh impossible. The government would need to come up with a completely new source of revenue.
What will probably happen is that SS will gradually be phased-out over the years and then eventually be replaced with something totally new. SS cannot be privatized. It can be combined perhaps with some private elements, but privatizing it would not be workable, because then it would be subject to the market, which means peoples accounts could be wiped out in the event of an economic, financial market, or stock market crash. So no matter how privatized, SS would need to retain some form of governmental security.
Medicare is another government program that is very popular. It is essentially a single-payer healthcare program for the elderly. It helps remove a massive burden on the part of the elderly, i.e., how to pay for healthcare. At least to a degree anyway. Medicare is funded by the federal government, via the FICA tax, but it is managed by the states. Medicare has a lot of problems of its own, ranging from high levels of fraud and abuse, to having been expanded beyond its original purpose, to not being financially sustainable in the long-term. Like SS, it may well end up being gradually phased-out over time and repalced with something else altogether.
In addition to Medcare, there is also Medicaid, which is a single-payer health insurance program for poor folk (many of its recipients, from what I have heard, are also among the elderly as well). And then of course there are programs such as unemployment benefits, food stamps, and other government programs. Now as I said, I have no problem with any of these programs in terms of WHAT THEY DO, because I see them as programs meant to serve as social safety nets. They are programs for the elderly (at least for the elderly who can no longer work), the disabled, and those who end up temporarily knocked on the butt due to plain bad luck. They are not an outright welfare state meant to pay people literally not to work. They don't seek to have the government coddle people for their entire lives. In terms of how they are actually structured, their functioning mechanics, I think the big ones (Medicare, Medicaid, Social Security) are badly designed.
The thing is, and I really am trying to find a point to this post as I can't, is that I don't know if adherence to all of these makes me a limited-government guy or not. Take unemployment benefits. One of the arguments made by strict fiscal conservatives and libertarians is that in hard times, charities, churches, and family are who should care for people and provide help, that the government should not be involved in this.
Well okay, I can understand this argument, but a problem is what happens if you have a major economic crisis as we just did, where charitable donations decline to charities and churches right when people need these institutions the most and where some charities lost their entire fortune due to folks like Bernie Madoff, and thus can no longer help anyone? At this point, if charities and churches are seeing a shortage of funds while seeing a massive increase in the number of needy people and families who need help, the government is the only entity with the ability to step in and provide help irregardless of the economy's health.
With regards to things such as government regulation over industry, I very much am a believer in, overall, light and efficient regulation for the economy. Obviously some industries must be more regulated than others, for example the automobile industry is a lot more regulated than the software industry. But overall, the economy should be subject to light, but efficient, regulation. Basically regulation that will do its job of keeping us safe, but not be excessive to the point that it allows big corporations to dominate and stifles innovation, entrepreneurship, economic growth, and so forth.
Thursday, February 3, 2011
Are Women Really Out-Majoring Men?
So one of the things popping up in the media lately is how women are now earning more degrees than men are (Census Data Shows More Women Than Men Hold College Degrees). The implication of this is that women are becoming more educated than men are. Okay, well maybe, but one thing I am very curious about is, what kind of degrees are these women earning? There are plenty of people who earn college degrees, but as shown by my post below, a lot of them are worthless degrees as well.
Now there are what you could call the "breadwinner" degrees. These are the degrees that are the toughest, most academically rigorous to get, usually in the fields of engineering, certain of the sciences, economics, finance, and business. Now I attended a university for awhile that has a pretty decent quality engineering school (Rochester Institute of Technology), and one thing I specifically remember was the utter dearth of women in the engineering colleges. I mean finding women in the Computer Engineering, Electrical Engineering, Mechanical Engineering, Industrial Engineering, etc...departments. FORGET IT. Once in awhile you would encounter one, but they were usually so rare (and you usually were so tied up with schoolwork that you were spending all of your time in the engineering colleges) that your reaction was something along the lines of, "WOW a woman!" A good-looking woman in an engineering college was even rarer (and yes I know that is sexist as hell, but at least where I was, it was true---all the good-looking women were in other colleges).
I saw the same thing in the colleges of mathematics and sciences as well. You would find more women in the sciences such as biology and chemistry for example, but otherwise, there still seemed to be a dearth. The business school seemed to have a higher proportion of women as well. It seemed to be that in engineering, there were no women, in the sciences, where there were more women, you'd find them mostly in biology and chemistry, but very few in physics, and in the business school, where there also were more women, they'd be in things like management, marketing, etc...but not so much in finance or economics.
The interesting thing was, the schools in which you would encounter an absolute FLOOD of women, were the liberal arts school and the arts school. I was literally stunned at the number of women (and good-looking women at that!) that I saw when I had to go into a few of these schools for some of the required courses I was taking.
Going back to the start of my post then, yes, the data may show women are earning far more degrees than men, but are they out-earning men in the degrees that actually make real money and produce things in society? Things like engineering, mathematics, economics, finance, etc...if they are not, then while they might be earning more degrees than men, in terms of the skills and degrees that really matter in society, one would probably conclude that it is men who still dominate.
One also only needs to look at the domination of men in the professorships of these fields. One will find plenty of women in the liberal arts professorships alongside the men, but when you look at the professorships of the engineering fields, the sciences, economics and finance, and so forth, they are all dominated by men. On Wall Street to. Women in high positions of finance on Wall Street are rare. I don't know about the corporate world, but I'd imagine it's the same.
If anyone has any hard data on this issue, I'd be plenty interested to see it. I suppose what one would need to look at is what percentage of each type of engineering degree and each type of science degree and so forth, go to men versus women.
Now there are what you could call the "breadwinner" degrees. These are the degrees that are the toughest, most academically rigorous to get, usually in the fields of engineering, certain of the sciences, economics, finance, and business. Now I attended a university for awhile that has a pretty decent quality engineering school (Rochester Institute of Technology), and one thing I specifically remember was the utter dearth of women in the engineering colleges. I mean finding women in the Computer Engineering, Electrical Engineering, Mechanical Engineering, Industrial Engineering, etc...departments. FORGET IT. Once in awhile you would encounter one, but they were usually so rare (and you usually were so tied up with schoolwork that you were spending all of your time in the engineering colleges) that your reaction was something along the lines of, "WOW a woman!" A good-looking woman in an engineering college was even rarer (and yes I know that is sexist as hell, but at least where I was, it was true---all the good-looking women were in other colleges).
I saw the same thing in the colleges of mathematics and sciences as well. You would find more women in the sciences such as biology and chemistry for example, but otherwise, there still seemed to be a dearth. The business school seemed to have a higher proportion of women as well. It seemed to be that in engineering, there were no women, in the sciences, where there were more women, you'd find them mostly in biology and chemistry, but very few in physics, and in the business school, where there also were more women, they'd be in things like management, marketing, etc...but not so much in finance or economics.
The interesting thing was, the schools in which you would encounter an absolute FLOOD of women, were the liberal arts school and the arts school. I was literally stunned at the number of women (and good-looking women at that!) that I saw when I had to go into a few of these schools for some of the required courses I was taking.
Going back to the start of my post then, yes, the data may show women are earning far more degrees than men, but are they out-earning men in the degrees that actually make real money and produce things in society? Things like engineering, mathematics, economics, finance, etc...if they are not, then while they might be earning more degrees than men, in terms of the skills and degrees that really matter in society, one would probably conclude that it is men who still dominate.
One also only needs to look at the domination of men in the professorships of these fields. One will find plenty of women in the liberal arts professorships alongside the men, but when you look at the professorships of the engineering fields, the sciences, economics and finance, and so forth, they are all dominated by men. On Wall Street to. Women in high positions of finance on Wall Street are rare. I don't know about the corporate world, but I'd imagine it's the same.
If anyone has any hard data on this issue, I'd be plenty interested to see it. I suppose what one would need to look at is what percentage of each type of engineering degree and each type of science degree and so forth, go to men versus women.
Worthless College Degrees
So one thing I have been reading about lately are all the college graduates who cannot find jobs, and who are now facing a mountain of student loan debt while only being able to get a job that they could have gotten without a college degree in the first place. There seems to be a lot being written about how it has turned out be a myth that a college degree was your ticket to a good future, that college graduates make significantly more money than high school graduates.
Well, there are two things I want to point out to prospective college students. You might already know these, but just in case you don't, here goes:
1) MAJOR IN SOMETHING THAT IS NEEDED. Seriously, a lot of people seem to major in what are ultimately worthless majors. If you major in something like Art History or Sociology, well yes we need people who know this stuff, but what exactly is the demand for it in the work world? Try to major in something that will be in demand. Now this can be tricky as well, as you might major in something and then find it that while it was in demand when you first went into it, that it is no longer in demand or is now a crowded field when you are graduating. Try to take all of this into consideration when you are choosing your major.
2) Consider how much you are paying for your education. By this I mean, if you are going to go to a super-expensive university, try to major in something that will let you pay off the debt. Look at your education as a form of investment for your future, basically a sum of money that you are going to spend to acquire a skill or a set of skills that will hopefully pay off in the long-term. DO NOT just blindly go to some ultra-expensive university and major in something that definitely will not provide you with the income to pay off the loans. That's gambling (and bad gambling at that!). Otherwise you will graduate with a worthless degree and a mountain of student loan debt. In general, try to go to the cheapest respectable school you can. I'm not saying if you have a choice between a great, but very expensive school, or a super-cheap, but not at all respectable school, to go to the cheap one, but I mean take cost into consideration.
Some schools, the extra cost is necessary. For example, if you are going to major in something like engineering, you want a school that has good engineering facilities and labs. Such a school will cost money. Luckily, engineers tend to have good demand, so provided you pick the right major, an expensive engineering school will probably have a better chance of paying for itself as opposed to an expensive liberal arts school.
Well, there are two things I want to point out to prospective college students. You might already know these, but just in case you don't, here goes:
1) MAJOR IN SOMETHING THAT IS NEEDED. Seriously, a lot of people seem to major in what are ultimately worthless majors. If you major in something like Art History or Sociology, well yes we need people who know this stuff, but what exactly is the demand for it in the work world? Try to major in something that will be in demand. Now this can be tricky as well, as you might major in something and then find it that while it was in demand when you first went into it, that it is no longer in demand or is now a crowded field when you are graduating. Try to take all of this into consideration when you are choosing your major.
2) Consider how much you are paying for your education. By this I mean, if you are going to go to a super-expensive university, try to major in something that will let you pay off the debt. Look at your education as a form of investment for your future, basically a sum of money that you are going to spend to acquire a skill or a set of skills that will hopefully pay off in the long-term. DO NOT just blindly go to some ultra-expensive university and major in something that definitely will not provide you with the income to pay off the loans. That's gambling (and bad gambling at that!). Otherwise you will graduate with a worthless degree and a mountain of student loan debt. In general, try to go to the cheapest respectable school you can. I'm not saying if you have a choice between a great, but very expensive school, or a super-cheap, but not at all respectable school, to go to the cheap one, but I mean take cost into consideration.
Some schools, the extra cost is necessary. For example, if you are going to major in something like engineering, you want a school that has good engineering facilities and labs. Such a school will cost money. Luckily, engineers tend to have good demand, so provided you pick the right major, an expensive engineering school will probably have a better chance of paying for itself as opposed to an expensive liberal arts school.
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